7/07/2003 @ 9:49AM

A Profit U-Turn For International Companies

While the economic downturn shaved 32% of the value off the U.S.-based S&P 500 over the past three years, many foreign companies suffered the same fate: The Morgan Stanley Capital International EAFE index is down 43% over the same period. But after a year or more of steep profit declines, some firms are expected to show markedly better results. We went sniffing through our Global 2000 list to find a few prospects.

Within the past month, security analysts have boosted their 2003 forecasts for the nine companies in the table below. And next year, each firm is expected to post earnings per share that exceed their five-year average earnings per share. All these firms sell for no more than 16 times estimated 2003 profits.

Example:
Nippon Yusen KK
, an overseas transportation company which trades on the Tokyo stock exchange. The largest shipping agent in Japan, the company operates over 750 ships and has its own cruise line. In dollar terms, Nippon Yusen’s revenue increased 9% last year to $10.4 billion. However, profits fell 19% after declining 51% in 2001.

This year, Nippon Yusen management predicts that profits will more than double to $275 million, or 23 cents per share. Consensus 2003 estimates come to a per-share figure of 22 cents; Nippon Yusen shares sell for only 17 times that amount.

International Turnarounds
Prices as of July 3. Sources: FT Interactive Data, Multex, Worldscope and Thomson First Call via FactSet Research Systems